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Westpac’s retail banks and subsidiaries last year scored an average of minus 7.5 per cent, while Australia’s third-largest internet service provider, iiNet, recently claimed a score of 56.7 per cent.

Those, to the uninitiated, are each company’s “Net Promoter Score”, the customer satisfaction metric that has been adopted with fervour at some of the world’s largest businesses in a bid to stem customer losses and maintain ­loyalty. The score is tracked by some companies in minute detail, down to a division, team, retail store or even call centre employee, dictating in some cases who gets the biggest bonus or the next promotion.

But the inventor of the score, Bain partner Fred Reichheld, has warned technology companies to brush up on their customer satisfaction or risk ­losing their user base to competitors.

“In some ways I think of technology companies as one of the last frontiers where net promoter thinking has come to be commonplace,” he told The Australian Financial Review.

“The traditional way of thinking has been to invent something that’s so good that your customers have to have it, and then find ways to price it as high as you can possibly price it, and minimise the service you can give; just enough ­service to not make them sue you or defect to the competition. This denial of service is famous in technology.

One simple question

“[Net Promoter is] the opposite for what tech companies do today.”

First invented in 2006 and implemented by General Electric, the NPS system measures a customer’s loyalty to the business by asking them a simple question; how likely are you to recommend that company to a friend?

Customers are asked to give a score of between 0 and 10. Subtract the negative responses – anything from 0 to 6 – from the positive responses – only a 9 or 10 – to give each company a score on a scale of -100 to 100.

The score isn’t generally audited – giving some companies free rein to ­proclaim any number they like – but it has become one measure companies are using to determine if their ­customers are likely to purchase more, or even remain with them.

In Australia last week to address a conference held by software vendor Genesys, Mr Reichheld is believed to have met with several CEOs, including a planned rendezvous with Telstra chief executive David Thodey. Mr Thodey has been one of the most vocal proponents of the system since mandating it at Australia’s largest telco in 2011.

Obsessed with customer satisfaction

Ever since, the company has asked that all-important question 10 million times, receiving 10 million answers. Mr Thodey says he lives and breathes it – to the point that he receives a daily message with the previous day’s scores.

Up to 40 per cent of “short-term incentives” for staff are now based on whether each team hits its individual customer satisfaction target.

But the company has been reticent to reveal its overall score – which once languished at minus 44 per cent according to 2006 estimates – or whether the company has markedly improved since.

iiNet, by contrast, said it was planning to reach an NPS of 58 per cent over the next year, with each percentage increase adding $1.65 million to the company’s bottom line.

Mr Reichheld said he was a “big fan” of Telstra’s approach to improving customer satisfaction, pointing to Britain’s Virgin Media as a parallel of a company turning around historically poor customer satisfaction.

“I think it’s the hardest position in most industries, and certainly in technology, for the incumbent to be truly customer-focused,” he said. “Smart CEOs recognise that and are putting it as their number one goal but the incumbent leader definitely has the greater challenge.”

But he said technology companies generally were slower to grasp the move to focusing on customer ­satisfaction.

“I think the Googles and Facebooks of the world would be wise to take Net Promoter seriously,” he said.

Without it, he warned, tech companies risked losing their customers to a new challenger, who focused on customer service as a differentiator from the incumbent.

“Once a company develops a technological advantage, there’s a huge temptation to say our earnings were a little short this quarter so we’ll put in this little tricky fee,” he said. “There’s no logic behind that of delighting customers, it’s just a desire to make Wall St happy.

“I would say, as a note of warning, this is a way tougher journey than meets the eye.”